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Tuesday, March 12, 2013

Apple A7 Foundry:TSMC, Samsung, Intel?

Reuters last week suggested that Apple and Intel have at the very least discussed the option of introducing its chips in to the iDevice range. It would make sense for Apple to diversify its fab manufacturing.

More is discussed in the report below (the updae). However it could be also just rumor to impact the real negotiations between Apple and its vendors.

The announcement this week that Intel would start providing foundry services to Altera moves them from a toe-in-the-water foundry provider to a player. On the surface, the question of whether Intel is ready for foundry might seem a bit silly.
Intel has leading edge technology, a massive manufacturing engine and world class controls on yield and cycletime. They have a highly integrated environment where design, product and process engineers have access to fab data, planners have availability of WIP information and sales orders, etc. This works great for them as an IDM.

Being a foundry is not just about building wafers for your customers, however. There is a broad spectrum of customer facing data and information that fabless or fab-lite customers require from their foundry on a regular and near real time basis. This includes:

• WIP reports (both in snapshot and lot-move format)
• Yield loss information both in process and at probe
• PCM data
• WAT data
• Lot start, WIP status, lot hold, ship alert, . . . information
• E-commerce information
The foundries have spent well over 15 years developing and refining a broad range of customer facing systems that provide this to their customers, both large and small. The information flows from WIP management and multiple other systems into data warehouses that are partitioned to keep customer data protected. It is a massive undertaking and one that continues to be refined today...."

and a reply by Andy Turudic ...

"Altera is ONE customer, a customer that is very savvy at doing pretty much every part of wafer manufacturing THEMSELVES, except the dipping silicon in beakers, and making almost all the transistors work, part. And Altera has IP to where ALMOST all the devices working is perfectly acceptable and yields passing devices at the billion+ transistor count level.

Altera's move to Intel is merely ONE customer and that does not make Intel a "player", but a shrewd business strategist that is moving to fill its fabs with large volume, BIG die, devices that pay a premium for high yield without compromising gross margin for either partner, and by taking on process-savvy customers vs every Joe Startup that comes along and needs caressing, handholding, WIP and process monitors, and a bureaucracy of "standard" support because they are not worth the time of the foundry in providing direct support. With Altera, Intel can remain an "IDM", no differently than it has two process flows in its captive fabs today. Both companies have honorable business dealings, so there's no fear of IP theft as there could be in an offshored scenario.

Intel is a world class fab, arguably at or very near the top of choices, that is capable of yield in the billion+ transistor class. Those are few and far between, as is demonstrated by Altera's competitor who appear that they cannot yield big die and instead are looking at 3D stacking smaller ones.... "

As Intel gets into the chip contracting business, the company could obtain as much as 10 percent of Apple's next-generation mobile chip orders, insiders believe.

"Institutional investors" cited by DigiTimes on Tuesday believe Intel could be making a play to get a slice of Apple's business for its so-called "A7" chip, expected to power the company's next-generation iPhone. Apple has reportedly been looking to move its chip production contracts away from rival Samsung, which currently handles all of the company's current A-series chips.

The company expected to take the bulk of the work away from Samsung is Taiwan Semiconductor Manufacturing Company. Rumors have claimed for years that TSMC is on the brink of building chips for Apple, but that has yet to happen.

Tuesday's report claimed that both TSMC and Samsung are competing for contracts to build "A7" chips for Apple. It said that production of A-series chips through TSMC is expected to begin in 2014.
Now, institutional investors reportedly believe that Samsung will receive about half of Apple's "A7" orders, while TSMC will take 40 percent, and Intel will grab the remaining 10 percent.

"In the past, Apple's processor orders were unattractive because of low profit margins and Samsung was the only cooperating firm," the report said. "In addition, at the time Samsung's smartphones were no threat to Apple's iPhone. But Samsung has since become the biggest smartphone vendor in the world."

Just last week, a separate report suggested that Intel and Apple were in talks for Intel to potentially build next-generation chips for devices like the iPhone and iPad. Intel may be making a shift to build ARM-based systems-on-chips for companies like Apple after the PC market has struggled in recent years against smartphones and tablets.
Intel's current CEO, Paul Otellini, plans to retire in May, and some market watchers believe a new chief executive could push the company in a different direction. In particular, contracts to build custom chips for mobile device makers could help keep the chipmaker's manufacturing facilities working at full capacity.